A plan to create the world's largest single civilian computer system linking all parts of the National Health Service is to be abandoned by the Government after running up billions of pounds in bills. Ministers are expected to announce next month that they are scrapping a central part of the much-delayed and hugely controversial 10-year National Programme for IT.

Instead, local health trusts and hospitals will be allowed to develop or buy individual computer systems to suit their needs – with a much smaller central server capable of "interrogating" them to provide centralised information on patient care. News of the Government's plans comes as a damning report from a cross-party committee of MPs concludes that the £11.4bn programme had proved "beyond the capacity of the Department of Health to deliver".

The Commons Public Accounts Committee (PAC) said that, while the intention of creating a centralised database of electronic patient records was a "worthwhile aim", a huge amount of money had been wasted.

"The department has been unable to demonstrate what benefits have been delivered from the £2.7bn spent on the project so far," Margaret Hodge, chair of the PAC, said. "It should now urgently review whether it is worth continuing with the remaining elements of the care-records system. The £4.3bn which the department expects to spend might be better used to buy systems that are proven to work, that are good value for money and which deliver demonstrable benefits to the NHS." A further £4.4bn was expected to be spent on other areas of the vast IT project.

The nine-year-old NHS computer project – the biggest civilian IT scheme ever attempted – has been in disarray since it missed its first deadlines in 2007. The project has been beset by changing specifications, technical challenges and clashes with suppliers, which has left it years behind schedule and way over cost.

Accenture, the largest contractor involved, walked out on contracts worth £2bn in 2006, writing off hundreds of millions of pounds in the process. Months earlier, the US supplier IDX, contracted to provide software in and around London, had also withdrawn from the project, making a $450m (£275m) provision against future losses from the two contracts.

The PAC said part of the problem had been weak leadership in the department. "The department could have avoided some of the pitfalls and waste if they had consulted at the start of the process with health professionals," it said.

"We are concerned that, given his significant other responsibilities, [NHS chief executive] David Nicholson has not fully discharged his responsibilities as the senior responsible owner for this project. This has resulted in poor accountability for project performance."

The report also criticises the contracts between the department and suppliers – so far, £1.8bn has been paid.

"One supplier, Computer Sciences Corporation (CSC), has yet to deliver the bulk of the systems it is contracted to supply and has instead implemented a large number of interim systems as a stopgap," it said.

The department told MPs it may be more expensive to terminate the contract than see it through, while another provider, BT, "has also proved unable to deliver against its original contract".

The Independent understands that next month the Government will set out a new strategy for IT in the NHS which will abandon any attempt to link up the NHS in a central system while trying to integrate those parts that have already been delivered.

The Government is involved in negotiations with contractors of the original scheme to claw back as much money from the contracts as possible – while not laying itself open to costly legal challenges. "We want to give control over decisions about new systems to the local NHS, rather than forcing a one-size-fits-all solution," a government source said.

"This allows trusts to retain the systems they want to suit their local needs, while taking advantage of elements of the new system. It means change can happen without ripping out entire existing systems, making that change more manageable, and, given the fast pace of technological change, greater ability to exploit the new innovations.

"We are working with the Cabinet Office right now to ensure we secure maximum value for the taxpayer on all contracts."

Responding to the PAC report, a department spokesman said: "The Government recognises the weaknesses of a top-down, centrally imposed IT system. Although elements of the programme have been delivered successfully, the policy approach previously taken has failed to engage the NHS sufficiently.

"We have already taken action to improve value for money in the NHS IT programme. We have reduced spending on the NHS IT programme by £1.3bn. We are engaging with the NHS to ensure it delivers even greater benefits for patients. We are determined to deliver even more value for money from the programme."

IT disasters...

E-Borders (Cancelled June 2011)

The scheme was originally created to check passenger details against UK police immigration watch lists. The Government tore up supplier Raytheon's £742m contract on the e-Borders immigration programme in July last year, after delays led the Home Office committee to say it had "no confidence"in the company.

Department Home Office

Cost £118m

ID Cards (Cancelled in January 2011)

Ministers claimed ID cards would help in the fight against illegal immigration and terrorism by storing details of all UK citizens on a centralised database. The scheme proved unpopular and was scrapped in January this year.

Department Home Office

Cost £257m (Source: Home Office)

Electoral register database (Cancelled in July 2011)

Plans to create an expensive database of electors were abandoned by the Government last month. The Co-ordinated Online Record of Electors (Core) was legislated for in 2006 and intended to make it easier for political parties to verify the legitimacy of their donors.

Department Ministry of Justice

Cost The database, which would have been administered by a new independent public body, would have cost an estimated £11.4m.

Firecontrol (Cancelled in December 2010)

Firecontrol aimed to replace 46 fire control centres in England with nine regional sites. The project was scrapped in December 2010 after suffering a series of delays, increased costs and an inadequate IT contract, according to a select committee report.

Department Communities and Local Government

Cost £469m (Source: National Audit Office)

Scope 2 (Cancelled July 2009)

The project was designed to allow the secure sharing of sensitive intelligence data between relevant departments in government and officials abroad. It was cancelled after reports of technological problems and escalating costs.

Department Cabinet Office

Cost £24.4m (Source: Cabinet Office)

Story of a sick system

October 2002 The Department for Health launches the NHS National Programme for IT, in a bid to create an electronic care record for patients in England and connect 30,000 general practitioners to 300 hospitals.

2006 Accenture, the largest contractor, walks out on contracts worth £2bn, writing off hundreds of millions of pounds in the process. Months earlier, the US software supplier, IDX, also quit the project.

2007 The Government misses its first deadlines as a report by the King's Fund criticises the Government's "apparent reluctance to audit and evaluate the programme".

2008 A report to the Enfield Primary Care Trust reveals difficulties with the system the previous year saw 63 patients of the Barnet and Chase Farm Hospitals NHS trust have their operations delayed because of missing data. The trust previously found the system had failed to flag up possible child-abuse victims.

2009 An earlier Public Accounts Committee report notes that the project has provided "little clinical functionality... to date".